CH SUM : Micro Economics

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What is the primary function of prices in a market economy?

To control the production of goods and services

To determine the profit of firms

To regulate the behavior of consumers and producers

To allocate resources efficiently (correct)

What is the characteristic of a perfect market?

Government control over prices

A large number of buyers and sellers with full information availability (correct)

Barriers to entry

A few large buyers and sellers

What is the relationship between price and quantity demanded according to the Law of Demand?

Inverse (correct)

Constant

Proportional

Direct

What is the exchange mechanism in a market?

The transfer of goods or services from sellers to buyers at agreed prices (D) Signup and view all the answers

What type of market deals with the exchange of resources necessary for production?

Factor market (A) Signup and view all the answers

What is the term for the satisfaction a consumer derives from a good or service?

Utility (D) Signup and view all the answers

What is the relationship between price and quantity supplied according to the Law of Supply?

Direct (D) Signup and view all the answers

What is the term for the worth of a good or service in terms of what it can be exchanged for?

Value (A) Signup and view all the answers

What is the characteristic of imperfect markets?

One or more conditions of perfect markets are not met (C) Signup and view all the answers

What type of market deals with the exchange of finished products?

Consumer market (C) Signup and view all the answers

What is the main purpose of setting minimum and maximum price levels?

To protect consumers from high prices and ensure producers receive a fair price (A) Signup and view all the answers

What is the term for the proposed system of providing minimum income support to all citizens?

Basic Income Grants (B) Signup and view all the answers

Why does the state often engage in the production of certain goods and services?

To correct market imperfections and ensure national security (A) Signup and view all the answers

What is the Production Possibility Curve (PPC) used to illustrate?

The trade-offs and opportunity costs associated with the allocation of limited resources (A) Signup and view all the answers

What is assumed to be fully utilized in the Production Possibility Curve (PPC)?

All resources at the lowest cost (C) Signup and view all the answers

What does a concave shape of the PPC indicate?

Increasing opportunity costs (D) Signup and view all the answers

What can cause a shift in the PPC?

Both internal and external factors (A) Signup and view all the answers

What do indifference curves show?

Different combinations of two goods that provide the same level of satisfaction or utility to a consumer (A) Signup and view all the answers

What is the primary goal of the public sector's interventions in the economy?

To redistribute income and address market imperfections (A) Signup and view all the answers

What is a key challenge for governments when intervening in the economy?

Balancing interventions with the need for economic efficiency and growth (C) Signup and view all the answers

What is market equilibrium?

When the quantity supplied equals the quantity demanded (D) Signup and view all the answers

What is the primary function of markets in resource allocation?

To allocate resources based on collective consumer preferences (D) Signup and view all the answers

What is the role of market forces in self-regulation?

To adjust supply and demand to maintain balance and efficiency (D) Signup and view all the answers

What determines the prices of goods and services in a market?

The interactions between buyers and sellers (D) Signup and view all the answers

What is the primary reason for public sector intervention in the economy?

To address market failures and promote social welfare (C) Signup and view all the answers

What is the purpose of taxation in public sector intervention?

To fund public services and allocate resources (B) Signup and view all the answers

What is the purpose of subsidies in public sector intervention?

To make essential goods more affordable (C) Signup and view all the answers

What is the purpose of price controls in public sector intervention?

To make essential goods more affordable by setting maximum prices (D) Signup and view all the answers

What is the characteristic of public goods?

They are non-excludable and non-rivalrous (C) Signup and view all the answers

What is the purpose of state production in public sector intervention?

To provide public goods and merit goods that are often subsidized or provided free at the point of use (D) Signup and view all the answers

What do indifference curves help in understanding?

Consumer preferences (C) Signup and view all the answers

What is a result of uneven income distribution?

Social and economic inequalities (C) Signup and view all the answers

What is the primary goal of government intervention in markets?

To correct inefficiencies and promote equitable distribution of resources (C) Signup and view all the answers

What is a consequence of high inflation rates?

Erosion of purchasing power (A) Signup and view all the answers

What is the purpose of environmental regulations?

To prevent businesses from causing irreversible environmental damage (D) Signup and view all the answers

What is a result of inefficient resource allocation?

Suboptimal position on the PPC (A) Signup and view all the answers

What do government policies aim to achieve?

To move the economy towards the PPC (C) Signup and view all the answers

What is the main purpose of antitrust laws?

To regulate monopolies and promote competition (A) Signup and view all the answers

What is the role of central banks in addressing inflation?

To adjust interest rates and use other monetary tools to control inflation (A) Signup and view all the answers

What is the PPC used for?

To understand the efficiency of economies (A) Signup and view all the answers

What is the primary role of buyers and sellers in a market?

To exchange goods and services through competition and negotiation (C) Signup and view all the answers

What is the characteristic that distinguishes a consumer market from a factor market?

Type of goods exchanged (B) Signup and view all the answers

What is the primary function of prices in a market economy?

To allocate resources efficiently (D) Signup and view all the answers

What is the term for the amount of money that buyers are willing to pay for a good or service?

Price (C) Signup and view all the answers

What is the primary characteristic of imperfect markets?

One or more conditions of perfect markets are not met (C) Signup and view all the answers

What is the term for the satisfaction that a consumer derives from a good or service?

Utility (B) Signup and view all the answers

What is the relationship between price and quantity supplied?

Direct (C) Signup and view all the answers

What is the primary purpose of market structures?

To provide information to buyers and sellers (A) Signup and view all the answers

What is the primary function of the exchange mechanism in a market?

To transfer goods or services from sellers to buyers at agreed prices (B) Signup and view all the answers

What is the primary role of competition in a market?

To attract buyers (D) Signup and view all the answers

What is the main purpose of market forces in a market economy?

To allocate resources efficiently (A) Signup and view all the answers

What is the primary reason for public sector intervention in the economy?

To address market failures and promote social welfare (D) Signup and view all the answers

What is the purpose of price controls in public sector intervention?

To maintain reasonable prices and prevent exploitation (D) Signup and view all the answers

What is the characteristic of merit goods?

They provide significant societal benefits (B) Signup and view all the answers

What is the role of taxation in public sector intervention?

To redistribute income and fund public services (D) Signup and view all the answers

What is the primary function of markets in resource allocation?

To determine what goods and services are produced and consumed (B) Signup and view all the answers

What is the purpose of subsidies in public sector intervention?

To support industries crucial for economic stability (A) Signup and view all the answers

What is the characteristic of public goods?

They are non-excludable and non-rivalrous (B) Signup and view all the answers

What is the main purpose of government spending in public sector intervention?

To fund public services and allocate resources (C) Signup and view all the answers

What is the role of regulation in public sector intervention?

To regulate economic activity and maintain reasonable prices (C) Signup and view all the answers

What is the primary goal of setting minimum and maximum price levels?

To ensure producers receive a fair price and consumers can afford essential goods (B) Signup and view all the answers

What is the purpose of social safety nets in the public sector?

To support individuals who are unable to participate fully in the economy (B) Signup and view all the answers

What is the effect of price floors and ceilings on demand and supply?

They distort the natural balance of demand and supply (B) Signup and view all the answers

What is the purpose of the state engaging in production?

To maintain strategic control in vital sectors (D) Signup and view all the answers

What is the shape of the PPC when opportunity costs are increasing?

Concave (C) Signup and view all the answers

What causes a shift in the PPC?

Changes in internal or external factors (C) Signup and view all the answers

Which of the following is NOT a cause of market failures?

Perfect Competition (D) Signup and view all the answers

What do indifference curves show?

Different combinations of two goods that provide the same level of satisfaction (D) Signup and view all the answers

What is the primary goal of government intervention in markets?

To correct inefficiencies and promote equitable distribution of resources (D) Signup and view all the answers

What is the primary goal of the public sector's interventions in the economy?

To address market imperfections and provide public goods (B) Signup and view all the answers

What is the key challenge for governments when intervening in the economy?

To balance interventions with the need for economic efficiency and growth (A) Signup and view all the answers

What is the result of inefficient resource allocation?

A suboptimal position on the PPC (B) Signup and view all the answers

What is the effect of the public sector's interventions on the economy?

It can lead to unintended consequences if not carefully designed and implemented (C) Signup and view all the answers

What do indifference curves help in understanding?

Consumer preferences (B) Signup and view all the answers

What is the purpose of environmental regulations?

To prevent businesses from causing irreversible environmental damage (D) Signup and view all the answers

What is a consequence of high inflation rates?

Erosion of purchasing power (B) Signup and view all the answers

What do government policies aim to achieve?

To move the economy towards the PPC (D) Signup and view all the answers

What is the role of central banks in addressing inflation?

To use monetary tools to control inflation (C) Signup and view all the answers

What is the purpose of income redistribution?

To help reduce income disparities (D) Signup and view all the answers

What is the main purpose of antitrust laws?

To prevent monopolistic practices and promote competition (B) Signup and view all the answers

What is the primary consequence of monopolies in a market?

Reduction of competition (D) Signup and view all the answers

What is the primary goal of government intervention in addressing inflation?

To control inflation rates (B) Signup and view all the answers

What is the primary effect of inefficient resource allocation?

Suboptimal position on the PPC curve (B) Signup and view all the answers

What is the primary role of environmental regulations?

To prevent irreversible environmental damage (A) Signup and view all the answers

What is the primary consequence of high inflation rates?

Erosion of purchasing power (A) Signup and view all the answers

What is the primary goal of income redistribution policies?

To reduce economic inequality (D) Signup and view all the answers

What is the primary effect of uneven income distribution?

Increase in social and economic inequalities (A) Signup and view all the answers

What is the primary role of government policies in addressing market failures?

To move the economy towards the PPC curve (D) Signup and view all the answers

What is the primary consequence of pollution?

Harming society's well-being (C) Signup and view all the answers

What is the primary goal of regulating monopolies?

To increase competition (D) Signup and view all the answers

What is the primary way in which markets allocate resources?

By determining what goods and services are produced and consumed based on collective consumer preferences reflected through prices (A) Signup and view all the answers

What is the role of market forces in self-regulation?

To naturally adjust supply and demand to maintain balance and efficiency without external interventions (A) Signup and view all the answers

What is the primary reason for the public sector to intervene in the economy?

To address market failures and redistribute income (D) Signup and view all the answers

What is the purpose of taxation in public sector intervention?

To fund public services and allocate resources (D) Signup and view all the answers

What is the characteristic of public goods?

They are non-excludable and non-rivalrous (B) Signup and view all the answers

What is the purpose of subsidies in public sector intervention?

To support industries crucial for economic stability (C) Signup and view all the answers

What is the purpose of price controls in public sector intervention?

To maintain reasonable prices and prevent exploitation (A) Signup and view all the answers

What is the role of the public sector in the economy?

To intervene in the economy to address market failures, redistribute income, provide public goods, and regulate economic activity (C) Signup and view all the answers

What is the primary purpose of government intervention in markets?

To correct market failures and promote social welfare (B) Signup and view all the answers

What is the result of uneven income distribution?

Social unrest and inequality (B) Signup and view all the answers

What is the primary difference between consumer markets and factor markets?

The type of goods and services exchanged (C) Signup and view all the answers

In a market economy, what is the primary role of prices in guiding the decisions of producers and consumers?

Allocating resources efficiently (D) Signup and view all the answers

What is the primary characteristic of imperfect markets that distinguishes them from perfect markets?

One or more conditions of perfect markets are not met (A) Signup and view all the answers

What is the primary function of the exchange mechanism in a market?

Transferring goods and services from sellers to buyers at agreed prices (D) Signup and view all the answers

According to the Law of Demand, what happens to the quantity demanded when the price of a good or service increases?

It decreases (D) Signup and view all the answers

What is the primary role of sellers in a market?

To compete with other sellers to attract buyers (B) Signup and view all the answers

What is the primary difference between value and utility?

Value is the worth of a good or service, while utility is the satisfaction derived from it (D) Signup and view all the answers

What is the primary objective of setting minimum and maximum price levels in an economy?

To ensure producers receive a fair price and consumers can afford essential goods (A) Signup and view all the answers

In a market economy, what is the primary role of prices in allocating resources?

To guide the decisions of producers and consumers (D) Signup and view all the answers

What is the primary goal of the public sector's interventions in the economy, according to the content?

To address market imperfections and provide public goods (A) Signup and view all the answers

What is the primary characteristic of perfect markets?

A large number of buyers and sellers, with no barriers to entry or exit, and full information availability (C) Signup and view all the answers

What is the shape of the Production Possibility Curve (PPC) that suggests increasing opportunity costs?

Concave curve (B) Signup and view all the answers

What is the primary function of competition in a market?

To drive innovation and improvement among sellers (C) Signup and view all the answers

What is the primary reason for the state's engagement in the production of certain goods and services?

To ensure national security and economic stability (B) Signup and view all the answers

What is the primary function of the Production Possibility Curve (PPC)?

To show the maximum potential output of two goods or services an economy can achieve (A) Signup and view all the answers

What is the primary purpose of Basic Income Grants?

To alleviate poverty and stimulate economic activity (A) Signup and view all the answers

What is the primary consequence of uneven income distribution?

Market instability and inefficiencies (C) Signup and view all the answers

What is the primary purpose of privatization?

To reduce the government's role in the economy (A) Signup and view all the answers

What is the primary function of indifference curves?

To show the different combinations of two goods that provide the same level of satisfaction (B) Signup and view all the answers

What is the primary challenge for governments when intervening in the economy?

Balancing interventions with the need for economic efficiency and growth (B) Signup and view all the answers

What occurs when the free market fails to allocate resources efficiently?

Market failure (D) Signup and view all the answers

What is the primary goal of government intervention in markets?

To correct market failures (C) Signup and view all the answers

What can lead to social and economic inequalities?

Uneven income distribution (B) Signup and view all the answers

What is the purpose of environmental regulations?

To reduce pollution (D) Signup and view all the answers

What occurs when resources are not used efficiently?

Inefficient resource allocation (D) Signup and view all the answers

What is the primary role of central banks in addressing inflation?

To adjust interest rates (B) Signup and view all the answers

What is the primary purpose of antitrust laws?

To regulate monopolies (B) Signup and view all the answers

What can be a consequence of high inflation rates?

Decreased purchasing power (D) Signup and view all the answers

What do indifference curves help in understanding?

Consumer preferences (D) Signup and view all the answers

What is the purpose of government policies in terms of resource allocation?

To move the economy towards the PPC (D) Signup and view all the answers

What is the primary consequence of market failures?

Inefficient allocation of resources (D) Signup and view all the answers

What is the main objective of government intervention in markets?

To correct inefficiencies and promote equitable distribution of resources (D) Signup and view all the answers

What is the result of high inflation rates?

Erosion of purchasing power (A) Signup and view all the answers

What is the purpose of environmental regulations?

To prevent irreversible environmental damage (A) Signup and view all the answers

What is the consequence of uneven income distribution?

Social and economic inequalities (B) Signup and view all the answers

What is the purpose of income redistribution policies?

To help reduce income disparities (D) Signup and view all the answers

What is the effect of inefficient resource allocation?

Suboptimal position on the PPC (C) Signup and view all the answers

What is the goal of government policies in correcting market failures?

To move the economy towards the PPC (C) Signup and view all the answers

What is the role of the Production Possibility Curve (PPC)?

To illustrate the efficiency of economies (B) Signup and view all the answers

What is the primary purpose of regulating monopolies?

To prevent monopolistic practices and promote competition (A) Signup and view all the answers

What is the primary reason that market failures occur?

When the free market fails to allocate resources efficiently (B) Signup and view all the answers

What is the primary goal of government intervention in the economy?

To promote equitable distribution of resources and correct market inefficiencies (B) Signup and view all the answers

What is the consequence of inefficient resource allocation?

The economy operates at a point inside the PPC (A) Signup and view all the answers

What is the primary role of central banks in addressing inflation?

To adjust interest rates and use other monetary tools to control inflation (C) Signup and view all the answers

What is the primary goal of regulating monopolies?

To prevent monopolistic practices and promote competition (A) Signup and view all the answers

What is the primary purpose of income redistribution?

To reduce income disparities (C) Signup and view all the answers

What is the primary purpose of environmental regulations?

To reduce pollution and prevent environmental damage (A) Signup and view all the answers

What is the primary consequence of high inflation rates?

Eroded purchasing power (C) Signup and view all the answers

What is the primary purpose of government policies?

To move the economy towards the PPC, representing efficient utilization of resources (D) Signup and view all the answers

What do indifference curves help in understanding?

The impact of changes in income or prices on consumption choices (B) Signup and view all the answers

CH SUM : Micro Economics

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Questions and Answers

What is the primary function of prices in a market economy?

What is the characteristic of a perfect market?

What is the relationship between price and quantity demanded according to the Law of Demand?

What is the exchange mechanism in a market?

What type of market deals with the exchange of resources necessary for production?

What is the term for the satisfaction a consumer derives from a good or service?

What is the relationship between price and quantity supplied according to the Law of Supply?

What is the term for the worth of a good or service in terms of what it can be exchanged for?

What is the characteristic of imperfect markets?

What type of market deals with the exchange of finished products?

What is the main purpose of setting minimum and maximum price levels?

What is the term for the proposed system of providing minimum income support to all citizens?

Why does the state often engage in the production of certain goods and services?

What is the Production Possibility Curve (PPC) used to illustrate?

What is assumed to be fully utilized in the Production Possibility Curve (PPC)?

What does a concave shape of the PPC indicate?

What can cause a shift in the PPC?

What do indifference curves show?

What is the primary goal of the public sector's interventions in the economy?

What is a key challenge for governments when intervening in the economy?

What is market equilibrium?

What is the primary function of markets in resource allocation?

What is the role of market forces in self-regulation?

What determines the prices of goods and services in a market?

What is the primary reason for public sector intervention in the economy?

What is the purpose of taxation in public sector intervention?

What is the purpose of subsidies in public sector intervention?

What is the purpose of price controls in public sector intervention?

What is the characteristic of public goods?

What is the purpose of state production in public sector intervention?

What do indifference curves help in understanding?

What is a result of uneven income distribution?

What is the primary goal of government intervention in markets?

What is a consequence of high inflation rates?

What is the purpose of environmental regulations?

What is a result of inefficient resource allocation?

What do government policies aim to achieve?

What is the main purpose of antitrust laws?

What is the role of central banks in addressing inflation?

What is the PPC used for?

What is the primary role of buyers and sellers in a market?

What is the characteristic that distinguishes a consumer market from a factor market?

What is the primary function of prices in a market economy?

What is the term for the amount of money that buyers are willing to pay for a good or service?

What is the primary characteristic of imperfect markets?

What is the term for the satisfaction that a consumer derives from a good or service?

What is the relationship between price and quantity supplied?

What is the primary purpose of market structures?

What is the primary function of the exchange mechanism in a market?

What is the primary role of competition in a market?

What is the main purpose of market forces in a market economy?

What is the primary reason for public sector intervention in the economy?

What is the purpose of price controls in public sector intervention?

What is the characteristic of merit goods?

What is the role of taxation in public sector intervention?

What is the primary function of markets in resource allocation?

What is the purpose of subsidies in public sector intervention?

What is the characteristic of public goods?

What is the main purpose of government spending in public sector intervention?

What is the role of regulation in public sector intervention?

What is the primary goal of setting minimum and maximum price levels?

What is the purpose of social safety nets in the public sector?

What is the effect of price floors and ceilings on demand and supply?

What is the purpose of the state engaging in production?

What is the shape of the PPC when opportunity costs are increasing?

What causes a shift in the PPC?

Which of the following is NOT a cause of market failures?

What do indifference curves show?

What is the primary goal of government intervention in markets?

What is the primary goal of the public sector's interventions in the economy?

What is the key challenge for governments when intervening in the economy?

What is the result of inefficient resource allocation?

What is the effect of the public sector's interventions on the economy?

What do indifference curves help in understanding?

What is the purpose of environmental regulations?

What is a consequence of high inflation rates?